EMC's Metamorphosis - InformationWeek

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1/30/2004
03:06 PM
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EMC's Metamorphosis

CEO Tucci used the recession to refocus his company

The past few years have been rough for technology vendors, even ones in hot markets like storage. Many hunkered down, cut staff and costs, and tried to ride out the recession. Not Joe Tucci, president and CEO of storage leader EMC Corp. He decided it was the perfect time to transform EMC from mainly a hardware company to one that increasingly focuses on software and services.

As part of that grand plan, EMC last year bought Documentum and VMware, following up on the purchase the year before of Legato Systems. EMC spent more than $3.5 billion on those three deals. The acquisitions should begin to pay off this year with the introduction of integrated data- and content-management software platforms from EMC, Tucci says. "For the first time, software and services should make up more than half of our total revenue."


Joe Tucci

"We must innovate faster than we ever have before," Tucci says.

Photo by Jason Grow
A growing economy will help. "All of us are always hoping for a pickup in expenditures, and we saw some growth in the fourth quarter that should continue in a better year ahead," Tucci says. "We expect storage-market growth of 6%, and 3% to 4% growth in the overall IT market."

The key, he says, is to deliver what customers need while developing products they don't yet know they need. "Customers want to buy more technology but only as they need it," Tucci says. "We vendors must keep ahead with the technology, but customers won't want it until they can use it."

One thing customers do want is a greater ability to "virtualize" storage devices and systems: to treat them as a single pool of resources that can be allocated and reallocated as needed. They also want better tools to automate the management of data from creation to deletion or long-term storage--something EMC calls information-life-cycle management. Better tools are on the way, Tucci says.

Tucci sees many areas for growth in business technology, including blade servers, Linux, and wireless, which he says "will still go bananas."

To take advantage of those opportunities, EMC is making big changes in the way it sells products. The company is known for its aggressive direct sales force. This year, it will try to increase sales through third-party resellers and systems integrators. "Customers could get more work done for less money, and we could bring product to market faster," he says.

Technology vendors played a part in the declining markets of the past three years and the growing belief that business technology doesn't provide much value anymore, Tucci says. "We got very sloppy in the late '90s as a country. We didn't get what we paid for, and then money wasn't as free flowing by 2000. But last year to this year, we saw a lot more productivity, and without business technology, you don't get such numbers," he says. "This year, we must innovate faster than we ever have before."

Tucci says 2004 should be the year business technology gets back on track. "You always learn a lot more from your failures than you do from your success."

EMC has operations around the globe, and Tucci says it will continue to hire the best people at the best price. "As global companies, we must tap into the global talent pool," he says. As for offshore outsourcing, he blames the U.S. educational system. "We're making victims of ourselves because we don't graduate more students with math and science degrees. We must make some bold moves in our education system."

Still, his biggest concern is the economy and employment. "Jobless numbers still aren't good, and we can't have economic recovery unless our people have jobs," he says. "It will be tricky because economic recovery is very fragile."

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